Find all School-related info fast with the new School-Specific MBA Forum

It is currently 29 Jul 2014, 03:25

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

Utility companies in the United States are generally private

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:
Manager
Manager
User avatar
Joined: 27 Jul 2011
Posts: 185
Followers: 0

Kudos [?]: 55 [0], given: 103

Utility companies in the United States are generally private [#permalink] New post 04 Jul 2013, 02:18
2
This post was
BOOKMARKED
00:00
A
B
C
D
E

Difficulty:

  5% (low)

Question Stats:

77% (01:54) correct 23% (00:38) wrong based on 40 sessions
Utility companies in the United States are generally privately-owned, for-profit business ventures. One notable exception is the Tennessee Valley Authority, which was formed under the New Deal in the 1930s and continues, under federal control, to provide electricity to parts of the Southeast. Given the current pro-business climate in the region, however, it is safe to say that TVA is long overdue to be privatized.

The argument that the ownership of the Tennessee Valley Authority should be privatized rests on which of the following assumptions?

A) A pro-business climate demands the private ownership of utilities.
B) New Deal programs are outdated and should be discontinued.
C) Electricity in the Southeast will be more efficiently distributed if utilities are privately owned.
D) The price of electricity is currently higher than it would be if TVA were privatized.
E) Most residents of the Southeast prefer that TVA enter private ownership


OA after some discussion
_________________

If u can't jump the 700 wall , drill a big hole and cross it .. I can and I WILL DO IT ...need some encouragement and inspirations from U ALL

Director
Director
avatar
Joined: 24 Aug 2009
Posts: 510
Schools: Harvard, Columbia, Stern, Booth, LSB,
Followers: 8

Kudos [?]: 354 [0], given: 241

Re: Utility companies in the United States are generally private [#permalink] New post 04 Jul 2013, 03:47
Utility companies in the United States are generally privately-owned, for-profit business ventures. One notable exception is the Tennessee Valley Authority, which was formed under the New Deal in the 1930s and continues, under federal control, to provide electricity to parts of the Southeast. Given the current pro-business climate in the region, however, it is safe to say that TVA is long overdue to be privatized.

The argument that the ownership of the Tennessee Valley Authority should be privatized rests on which of the following assumptions?
A) A pro-business climate demands the private ownership of utilities. - Classical Shell game option. Pro-business climate DEMANDS privatization but not MANDATES it. Incorrect
B) New Deal programs are outdated and should be discontinued. - Ok, outdated programs should be discontinued, so we should close the "Tennessee Valley Authority" rather than privatize. Incorrect
C) Electricity in the Southeast will be more efficiently distributed if utilities are privately owned. - In order to increase Efficiency, we should privatize TAV, but before that check option C. Very close option but incorrect.
D) The price of electricity is currently higher than it would be if TVA were privatized.
-Lets say the current electricity price is 2$/unit
electricity price after privatization is 1$/unit

Before privatization TAV (NOT for-profit business venture) is charging higher price. WHY?
Not because TAV wants to make huge money as it's a NOT for-profit business venture but because of certain inefficiencies that we don't know.

WHY & HOW costs will be lower after privatization?
May be coz of Competition, Efficiency & many other factors etc

If privatization can reduce costs & improve efficiency , we should make TAV private
- Correct

E) Most residents of the Southeast prefer that TVA enter private ownership - Author is not concerned about the preferences of residents. Incorrect

SO OA should be D
Very good question after a long time. I would definitely place it in 700+ level.
_________________

If you like my Question/Explanation or the contribution, Kindly appreciate by pressing KUDOS.
Kudos always maximizes GMATCLUB worth
-Game Theory

If you have any question regarding my post, kindly pm me or else I won't be able to reply

Intern
Intern
avatar
Joined: 16 Jan 2013
Posts: 43
Concentration: Finance, Entrepreneurship
GMAT Date: 08-25-2013
Followers: 0

Kudos [?]: 10 [0], given: 8

Re: Utility companies in the United States are generally private [#permalink] New post 04 Jul 2013, 10:30
+ 1 for D ,A is authoritative.

A) A pro-business climate demands the private ownership of utilities.
Manager
Manager
avatar
Joined: 14 Nov 2011
Posts: 147
Location: United States
Concentration: General Management, Entrepreneurship
Schools: Stanford '15
GPA: 3.61
WE: Consulting (Manufacturing)
Followers: 0

Kudos [?]: 17 [0], given: 97

GMAT ToolKit User
Re: Utility companies in the United States are generally private [#permalink] New post 04 Jul 2013, 20:05
BukrsGmat wrote:
Utility companies in the United States are generally privately-owned, for-profit business ventures. One notable exception is the Tennessee Valley Authority, which was formed under the New Deal in the 1930s and continues, under federal control, to provide electricity to parts of the Southeast. Given the current pro-business climate in the region, however, it is safe to say that TVA is long overdue to be privatized.

The argument that the ownership of the Tennessee Valley Authority should be privatized rests on which of the following assumptions?

A) A pro-business climate demands the private ownership of utilities.
B) New Deal programs are outdated and should be discontinued.
C) Electricity in the Southeast will be more efficiently distributed if utilities are privately owned.
D) The price of electricity is currently higher than it would be if TVA were privatized.
E) Most residents of the Southeast prefer that TVA enter private ownership


OA after some discussion


Need more explanations for this.
1 KUDOS received
Verbal Forum Moderator
Verbal Forum Moderator
User avatar
Joined: 15 Jun 2012
Posts: 992
Location: United States
Followers: 112

Kudos [?]: 1103 [1] , given: 118

Re: Utility companies in the United States are generally private [#permalink] New post 05 Jul 2013, 01:42
1
This post received
KUDOS
2
This post was
BOOKMARKED
I picked A and here is my 2 cents.

First, this one asks about “supporter assumption”.
The form of this question is like:
X is not Y
Because of A, X should be Y

The assumption is: A requires X to be Y.

For example:
In the past, almost CEOs in company X did not hold an MBA
Because of the new hiring rules, all CEOs in company X should hold an MBA.
==> Assumption: new hiring rules require all CEOs applicants to hold an MBA.
If we negate this assumption: new hiring rules require all CEOs applicants NOT to hold an MBA ==> Conclusion “all CEOs should hold MBA” fails.

Back to this question.

ANALYZE THE STIMULUS:

TVA is not privately-owned, for profit business company
Because of current pro-business climate in the region, TVA should be privatized.
Assumption should be: the current pro-business climate requires TVA to be privately-owned, for profit business company

ANALYZE EACH ANSWER:

A) A pro-business climate demands the private ownership of utilities.
Correct. As stated above.

B) New Deal programs are outdated and should be discontinued.
Wrong. Even the New deal programs would be discontinued, TVA is still under Federal control.

C) Electricity in the Southeast will be more efficiently distributed if utilities are privately owned.
Wrong. TEMPTING, but wrong. Please note that the argument does not say TVA is distributing electricity NOT efficiently.

D) The price of electricity is currently higher than it would be if TVA were privatized.
Wrong. D actually assumes electricity prices would be lower if TVA were privatized. However its logic is wrong because:
(1) TVA is the government-owned company now, so Government should back up its financial problems, TVA does not have to raise prices to get more profit. However, if it were privatized and would be for-profit company, why TVA lower prices? It does not make sense (at least in practice). In addition, if prices would be lower, assume you were an investor, your motivation is profit, should you buy TVA?
==> Therefore, D is not "Must Be True" assumption.
(2) Assumption is the foundation of the conclusion, do not assume too far. The answer “could be true” is always correct. Please make sure the assumption is MUST be true. No Assumption ==> No conclusion.

E) Most residents of the Southeast prefer that TVA enter private ownership
Wrong. The fact “residents prefer….” is not relevant and does not help maintain the conclusion.

Waiting for OA.
_________________

Please +1 KUDO if my post helps. Thank you.

"Designing cars consumes you; it has a hold on your spirit which is incredibly powerful. It's not something you can do part time, you have do it with all your heart and soul or you're going to get it wrong."

Chris Bangle - Former BMV Chief of Design.

VP
VP
User avatar
Joined: 01 Oct 2013
Posts: 1453
Followers: 207

Kudos [?]: 44 [0], given: 0

Premium Member
Re: Utility companies in the United States are generally private [#permalink] New post 08 Jul 2014, 23:52
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
Manager
Manager
avatar
Joined: 25 Apr 2014
Posts: 59
Followers: 0

Kudos [?]: 4 [0], given: 982

Re: Utility companies in the United States are generally private [#permalink] New post 10 Jul 2014, 09:47
+ 1 for A.
Please provide the OA.
Manager
Manager
User avatar
Joined: 23 Jan 2013
Posts: 87
Followers: 0

Kudos [?]: 4 [0], given: 15

Utility companies in the United States are generally private [#permalink] New post 13 Jul 2014, 01:59
BukrsGmat wrote:
Utility companies in the United States are generally privately-owned, for-profit business ventures. One notable exception is the Tennessee Valley Authority, which was formed under the New Deal in the 1930s and continues, under federal control, to provide electricity to parts of the Southeast. Given the current pro-business climate in the region, however, it is safe to say that TVA is long overdue to be privatized.

The argument that the ownership of the Tennessee Valley Authority should be privatized rests on which of the following assumptions?

A) A pro-business climate demands the private ownership of utilities.
B) New Deal programs are outdated and should be discontinued.
C) Electricity in the Southeast will be more efficiently distributed if utilities are privately owned.
D) The price of electricity is currently higher than it would be if TVA were privatized.
E) Most residents of the Southeast prefer that TVA enter private ownership


OA after some discussion


Argument structure is:

Because current pro-business climate ------------> It is late company to be currently privatized

Pro-business climate wants company to be privatized
. That is the assumption. Answer A fits best
Utility companies in the United States are generally private   [#permalink] 13 Jul 2014, 01:59
    Similar topics Author Replies Last post
Similar
Topics:
2 Experts publish their posts in the topic The United States government generally tries to protect Marcab 8 11 Dec 2012, 02:11
6 The first United States Solicitor General, Benjamin H. solarzj 5 03 Jun 2012, 02:16
The United States government generally tries to protect lahoosaher 8 13 Sep 2009, 06:50
SC- Companies in the United State sandipchowdhury 9 08 Jan 2009, 03:49
The United States government generally tries to Protect crackgmat3 2 14 Sep 2004, 12:57
Display posts from previous: Sort by

Utility companies in the United States are generally private

  Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Privacy Policy| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group and phpBB SEO

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.